Organic vanilla fetches premium in US market

CURED organic vanilla exported from the country has fetched $70-75 a kg in the US market, while the ordinary cured beans of Gaurmet grade has been sold for $60-65, according to a Mysore-based exporting firm.

It exported 2,294 kg of cured organic vanilla to the US in March. Lower grade cured beans were getting $30-35 a kg, official sources told Business Line.

According to them, the price of cured vanilla in the world market would pick up to moderate levels once the user industry, which had switched over to synthetic vanillin when the prices of the commodity shot up to unaffordable levels, revert to natural vanillin.

But, the conversion process is at a slow pace contrary to earlier expectations probably because of the wild fluctuations in price. As a result, demand has not picked up yet.

The market is highly volatile and there is a downward trend seen in Madagascar, the world's largest producer of vanilla. It has about 400-600 tonnes of unsold cured beans, which is at present offered at $25 a kg, the sources said.

However, they said, "there will be a turnaround by next year as the demand has started picking albeit slowly".

According to market sources here, the Indian vanilla has been fetching around $35-45 a kg. Its exports during April-March 2004-05 increased to 38 tonnes valued at Rs 27.59 crore from 27 tonnes worth Rs 38.72 crore in 2003-04. The unit value had dropped sharply to Rs 7,728.38 a kg last fiscal from Rs 14,178.10 a kg in the previous year.The total Indian production is estimated at around 100 tonnes of cured beans. The major processing companies, which were holding stock are said to have liquidated it, probably to avoid any future risk. However, some are still holding it anticipating that the prices would go up substantially, they said.

A grower in Idukki is said to have sold his produce of cured beans at Rs 1,500 a kg. Meanwhile, a private agency has reportedly been offering Rs 6,000 a kg.

(This article was published in the Business Line print edition dated May 12, 2005)

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